Most of the president's proposals and assessments were made public earlier and were mainly developed in the Finance Ministry.
Photo: Mikhail Razuvaev
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Medvedev Maintains Putin’s Budget
The text of Russian President Dmitry Medvedev’s budget message published Monday evening shows the succession of the budget policy of conservatism and stability. Most of his proposals and estimates were made public earlier and were mainly developed in the Finance Ministry. Thus, the assessment of the current situation in the message closely resembles that in the introduction to the new edition of the Budget Code and the proposals for improving the tax system resemble the Finance Ministry’s document “Basic Directions in Tax Policy.”
The tasks Medvedev holds out for the immediate future are also unchanged: modernize the economy, overcome the demographic crisis and lower inflation. The measures suggested for their fulfillment are extraordinarily similar to those proposed earlier by Finance Minister Alexey Kudrin: limit budget spending, monitor the effectiveness of budget spending and change tax legislation. The changes are not revolutionary. The most controversial issue in tax legislation – lowering VAT – is ignored. Thus, the ideas in the message are not original, but they are difficult to implement.
The State Duma is due to make the third set of changes in the 2008-2010 budget within days. Another set of changes seems inevitable in autumn as well.
The main innovation in the president’s budget message is a transition to 15-year planning, for which the creation of a “mechanism for forecasting socio-economic development” is needed. This may be a coded indication that the Ministry of Economic Development will lose another function to the Finance Ministry. The quality of forecasting of the inflation rate, for example, has been less than satisfactory.
Another important section of the message concerns pensions. Funding of the Pension Fund is growing faster than the economy as the population ages. The president has proposed funding the Pension Fund from the national prosperity fund. That is, instead of shifting from budget funding to private pension funds, it is suggested to supplement budget funding.
www.kommersant.com
All the Article in Russian as of June 25, 2008
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